Source: Deep Web Tencent News
Author: An Ran

In the past six months, nearly a hundred AI glasses companies benchmarking Ray-Ban Meta have emerged in China. According to Tianyancha data, in the past six months and nearly three months, there have been over 400 and 160 companies respectively established in China that include businesses related to AI glasses.

"I know of more than 20 newly established companies making AI glasses. Later, feedback from the upstream supply chain revealed that there are now over 50 venture companies making AI glasses. There have even been companies specializing in providing AI glasses solutions, specifically offering ready-made solutions to companies interested in making AI glasses and supporting OEM production." Xia Yongfeng, founder and CEO of Honeycomb Technology, revealed to "AI Light Year".

In the second half of this year, domestic venture companies suddenly flocked to AI glasses, with one key reason being $Meta Platforms (META.US)$ the AI glasses Ray-Ban Meta jointly launched with Ray-Ban achieved global sales of 1 million units in just over half a year, and is expected to achieve a sales target of 2 million units this year.

What does 2 million mean? According to IDC data, the global sales of AR glasses in 2023 will be 0.48 million units, and smart glasses sales will be 1.01 million units. A single pair of AI glasses sold 1 million units in less than a year, bringing unprecedented confidence and imagination to players who have been tirelessly exploring and supporting in the AR, VR, and XR fields.

Ray-Ban Meta unexpectedly achieved a million-unit sales volume with a single product, beyond Zuckerberg's expectations. In an interview in July this year, he stated, "I never expected AI to arrive before AR." However, Zuckerberg still believes that VR/AR is one of the important future technology trends and is preparing for it.

According to IDC's data, the shipment volume of wearable devices is expected to reach 0.5597 billion units in 2024, a 10.5% year-on-year growth. Among them, the growth of smart glasses is the most significant, with a shipment volume increase of 128.2% in 2023, far exceeding smart rings (34%) and smartwatches (8.7%).

A lesson worth billions of dollars.

Three years ago, at the Connect conference, Zuckerberg announced the company's focus on the metaverse business, bullish on VR glasses Quest hardware business, and the virtual reality social platform Horizon.

According to Zuckerberg's understanding, AI smart glasses are the transitional form from traditional glasses to AR glasses. The development of AI glasses may follow the path of AI voice glasses - AI smart glasses (with added cameras) - AI+AR glasses in gradual iterations.

This seemingly simple conclusion is what Zuckerberg paid billions of dollars in tuition fees to learn.

From the fourth quarter of 2021 to the third quarter of 2022, the department Reality Labs, focusing on VR, AR, and MR technology research and development, brought Meta a operational loss of 12.742 billion US dollars, leading to a significant drop in Meta's stock price. From 2022 to 2023, Meta's market cap was halved, dropping from 927.9 billion US dollars on January 3, 2022, to 326.1 billion US dollars on January 3, 2023.

In early March 2023, Meta's VR Vice President Mark Rabkin revealed the news that "Meta has sold nearly 20 million units of the Quest series," but this still did not stop the trend of Meta's total market cap evaporating by nearly half in a year. It was not until Meta launched and iterated the open-source large language model Llama that its market cap quickly rebounded, breaking through the trillion-dollar mark.

It should be pointed out that the eruption and implementation of generative AI are only the underlying background for Zuckerberg's conclusion that AI will arrive before AR. In fact, before the release of Ray-Ban Meta, the first smart glasses launched by Meta and Ray-Ban did not receive market recognition.

In September 2021, Meta and Ray-Ban jointly launched the first generation of smart glasses, Ray-Ban Stories, which can achieve FPV shooting, video recording, calls, music listening, and other functions. However, this AI glasses, armed with technology to the extreme, did not win over users and ultimately ended with dismal sales.

According to sources familiar with the matter, the initial market forecast sales volume of Ray-Ban Stories by Meta was 2 million units, later revised down to 1 million units, but ultimately only sold tens of thousands of units.

In September 2023, Meta and Ray-Ban launched the new generation of AI glasses, Ray-Ban Meta, with a starting price of $299. Compared to Ray-Ban Stories, Ray-Ban Meta has more sophisticated conversational AI functions. In April 2024, Ray-Ban Meta was updated in AI, the new model is equipped with the Meta Llama3 large model and can achieve voice interaction, object recognition, text translation, and many other functions.

With the support of AI, Ray-Ban Meta's sales have significantly increased. According to The Verge data, as of May 2024, Ray-Ban Meta's global sales have exceeded 1 million pairs. "By the end of this year, Ray-Ban Meta's global sales may reach 2 million pairs, but it depends on this year's 'Black Friday' sales," sources familiar with the matter revealed to "AI Light Years".

Additionally, according to data from iLoveAudio.com, from 2022 to 2030, the compound annual growth rate (CAGR) of global audio glasses shipments will reach 13.6%. It is estimated that by 2025, global audio glasses shipments will exceed 5.03 million pairs, and by 2030, this number will further increase to 9.51 million pairs.

The AI glasses market has not formed a head effect.

Regarding the reasons why Meta's new generation of AI glasses sales may turn the tide, Xia Yongfeng believes, "The improvement in Ray-Ban Meta sales due to AI functions can at most be considered a selling point of T1 or T2. The primary factor determining the sales of AI glasses is that they are first and foremost trendy sunglasses that users like. Only with a good hardware foundation can the discussion of AI functions be further advanced."

Xia Yongfeng was one of the founders of the Xiaomi ecosystem chain. In 2020, he left Xiaomi to establish Beijing Honeycomb Century Technology Co., Ltd. (hereinafter referred to as Honeycomb Technology). In the early days of the venture, Honeycomb Technology launched products such as the MiJia Glasses Camera and MiJia Audio Glasses.

The conclusion that the primary factor determining the sales of AI glasses is the hardware itself was reached by Xia Yongfeng after iterating through multiple products. 'In mid-2021, we successively completed two rounds of financing. Many investors suggested that I should add dual screens to enter the AR glasses field, but I resisted the pressure,' Xia Yongfeng told 'AI Light Years'.

Xia Yongfeng refused to add dual screens to AI glasses for three reasons: First, current AR glasses users are mainly technology enthusiasts or B-end enterprises, with few ordinary consumers. Second, the glasses industry is one of the few industries that have not been completely disrupted by the internet, indicating that the core demand of users for glasses is long-term comfortable wear rather than various complex display functions. Third, current AI technology does not create new user demands but rather enhances user experience.

The turnaround in sales of Ray-Ban Meta provided inspiration to Xia Yongfeng. On August 8th this year, Honeycomb Technology officially launched the AI Audio Glasses under its proprietary brand 'Jie Huan', featuring functions such as notification broadcasting, AI chat, and translation.

Unlike Ray-Ban Meta's focus on overseas markets and sunglasses, Xia Yongfeng's AI glasses mainly target China's massive user base of 0.7 billion myopia users.

According to Xia Yongfeng, the overall shipment volume of the company's audio glasses this year is approximately 100,000 units, with 89% being myopic users. The most active top 25% of users wear them on average for 10.7 hours per day.

In terms of channels and offline services, Honeycomb Technology has adopted a partnership model similar to Meta and Ray-Ban, strategically cooperating with its proprietary brand Jie Huan and traditional glasses brands like Dr. Glasses and Baodao Glasses, gradually entering the major stores of these brands.

The differences in this market positioning are mainly due to the different eyeglass consumption habits of domestic and international users. In the United States, sunglasses occupy a significant market share, while in China, the sales of frame glasses (including myopic glasses, reading glasses, and astigmatism glasses) are significantly higher than sunglasses. According to statistics, as of June 2021, the number of myopia patients in China has reached 0.6 billion.

Currently, the AI eyewear market is fragmented and has not yet formed a clear head brand effect, while the collaboration between Meta and Ray-Ban has set a successful example for the AI eyewear industry at home and abroad. According to Bloomberg, Apple's Vision Products Group team is developing three types of smart eyewear products, one of which is smart eyewear similar to Ray-Ban Meta.

Byte, Huawei, and Xiaomi are actively deploying.

Compared to overseas markets, the domestic market is generally a bit later. According to online monitoring data from RUNTO Technology, from January to July 2024, the cumulative sales volume of smart audio eyewear in the online market in China (excluding Pinduoduo and Kuaishou) reached 0.07 million units, a year-on-year increase of 45.3%; sales revenue was 81.6 million yuan, a year-on-year increase of 57.6%.

Currently, with the support of AI, dozens of domestic companies have entered the market, and if we count the upstream and downstream industry chain, the 'Hundred Glasses War' has begun. For example, AR manufacturer Leibird Innovation announced a partnership with Doctorglasses chain to create audio+AI eyewear; ByteDance's full acquisition of Oladance may pave the way for entering the AI audio eyewear market.

In the VR hardware field, ByteDance's development path is similar to Meta's, both entering the metaverse business by acquiring VR venture companies.

In 2014, Meta acquired Oculus, launching the VR headwear device Oculus Quest (later renamed Meta Quest). As of now, the Quest series has iterated to Quest 3S.

ByteDance also entered the VR eyewear market by acquiring a VR venture company. In August 2021, ByteDance fully acquired Pico (Peking Xiaoniao Kankan Technology Co., Ltd.) and launched its first VR eyewear product, PICO 4, one year later.

XREAL founder and CEO Xu Chi once revealed to 'AI Light Years': 'One year, Pico spent 4 billion yuan on terminal distribution, but sales did not meet expectations.' Currently, ByteDance has reduced its investment in the VR business.

The sales of PICO fell short of expectations and did not dampen ByteDance's enthusiasm for AI hardware. After the AI glasses Ray-Ban Meta went viral, ByteDance fully acquired the open earphone brand Oladance 100% equity in September this year, and launched the first smart earphone Ola Friend with a bean big model on October 10th.

This smart earphone is just the first step for ByteDance to lay out AI smart hardware. Huajin Securities speculates that ByteDance's acquisition of Oladance is not only to layout the audio field, but also to lay the foundation for entering the AI audio glasses market.

In the domestic AI glasses market, in addition to VR glasses manufacturers seeking to cooperate with traditional eyewear brands to launch AI glasses, some leading smartphone manufacturers have also introduced AI glasses. For example, Huawei and Xiaomi both introduced a new generation of smart audio glasses in the first half of this year.

Huawei's previous audio glasses were mainly OEM by Goertek Inc. . Currently, Huawei has an internal team of more than 30 people developing Huawei AI glasses. OPPO and vivo research institutes are also working on AI glasses, according to sources familiar with it.

Editor/rice